Responsible for Deceased Father's Debt?

[Discovery]

Hello,

My father recently passed away in Michigan and left ~$25,000 worth of credit card debt behind. He had a house, car, 3 pensions, bank account (small amount of money) and a 401K in his name.

Can the credit debt be forgiven? (My Mother is authorized to use the cards, but my Father is the only owner of the accounts.) Will the credit card companies take this to probate court and take funds from the estate? Can / will the courts take the house / vehicle away? (My mother still lives in the house and drives the car) Can they take money out of the bank account, pension, or 401K? Should we get a lawyer?

If the debt cannot be forgiven, what are our options? Will we be able to decrease the total amount that's due? Is there assistance available to repay everything?



What is the name of your state (only U.S. law)? Michigan

 

[aldaron]

Need to open probate creditors want their money. IRS wants your statements too.

 

[LdiJ]

Hello,

My father recently passed away in Michigan and left ~$25,000 worth of credit card debt behind. He had a house, car, 3 pensions, bank account (small amount of money) and a 401K in his name.

Can the credit debt be forgiven? (My Mother is authorized to use the cards, but my Father is the only owner of the accounts.) Will the credit card companies take this to probate court and take funds from the estate? Can / will the courts take the house / vehicle away? (My mother still lives in the house and drives the car) Can they take money out of the bank account, pension, or 401K? Should we get a lawyer?

If the debt cannot be forgiven, what are our options? Will we be able to decrease the total amount that's due? Is there assistance available to repay everything?



What is the name of your state (only U.S. law)? Michigan

Things don't work quite the way that you think that they do. Your father's estate is responsible for your father's debts. However, your father's estate consists of items that do not pass outside of his estate. Most likely the house passes outside of the estate, the car may pass outside of the estate, the pensions, bank account and 401k may also pass outside of the estate if he had named beneficiaries.

Your mother is not responsible for paying his credit card debt, but its critical that your mother NOT use any of the cards for any reason. She needs to cut them up. She also needs to consult a probate attorney to determine the status of each of the assets.

 

[Discovery]

Thank you for your response. Are there any resources to determine what is part of the estate and what passes outside of the estate?

 

[ecmst12]

It depends on how the assets are titled.

 

[LdiJ]

Thank you for your response. Are there any resources to determine what is part of the estate and what passes outside of the estate?

Examples:

Married couples normally have houses that are titled "joint tenancy with rights of survivorship". If the house is titled that way, then it passes to your mother outside of the estate.

Life insurance always has a beneficiary (unless the beneficiary is the estate) and therefore normally passes outside of an estate.

Pensions are often not liquid assets that can be part of an estate, because they often have no "cash value". They either end when the party passes away or they go to a surviving spouse on a limited basis, month to month.

A 401k often has a designated beneficiary, so they often pass outside of an estate. However, sometimes they do not have a designated beneficiary and become part of the estate...same thing with a bank account.

Cars...those are a little different. Creditors often don't bother with cars because they frequently do not have enough equity to make the hassle of selling them worth the creditor's time. However sometimes they pass outside of an estate as well.

 

[latigo]

Hello,

My father recently passed away in Michigan and left ~$25,000 worth of credit card debt behind. He had a house, car, 3 pensions, bank account (small amount of money) and a 401K in his name.

Can the credit debt be forgiven? (My Mother is authorized to use the cards, but my Father is the only owner of the accounts.) Will the credit card companies take this to probate court and take funds from the estate? Can / will the courts take the house / vehicle away? (My mother still lives in the house and drives the car) Can they take money out of the bank account, pension, or 401K? Should we get a lawyer?

If the debt cannot be forgiven, what are our options? Will we be able to decrease the total amount that's due? Is there assistance available to repay everything?

Sorry for the loss of your love one.

You have failed to mention whether or not our father left a will.

But regardless of whether he died testate (a will) or intestate (without a will) in order to determine the proper disposition of assets and the responsibility for paying money owned at the time of your father’s death either you or you mother MUST consult with a Michigan attorney practicing the state’s probate laws.

Do not attempt to avoid that expense. Probate procedures and survivorship rights are far too complicated for a layperson. And you are not going to adequately acquaint yourself by use of the Internet.

So, for your general information only……

Regardless of whose name may appear as the owner of the home and other assets remaining at death, it is more than likely that they consist of marital property. That is, property in which you mother held a joint interest. An interest she would now hold jointly with your father’s estate.

And again generally speaking, unless all the assets were held in joint tenancy with right of survivorship – meaning that full ownership would automatically pass to the survivor - it will be necessary that your father’s estate be probated.

It is also more than likely that the credit card debt, even though the account may have been solely in your father’s name, is a marital debt to which your mother is personally responsible. At least to the extent of her interest in the marital assets.

These are just some of the issues that need to be addressed and explained by the lawyer.

But regardless, that credit card debt is not going to go away nor is it is not going to be whittled down. It must be addressed in the probate process and paid before any assets in the estate are distributed. And if it is determined to be a marital obligation (most likely) then all marital property is liable for its payment and your mother will need to deal with it.

Because there is no outside assistance available to pay it now any more that there was during your father's lifetime.

Good luck

 

[ecmst12]

Michigan is NOT a community property state, so mom is not necessarily going to be automatically responsible for dad's credit card debt.

 

[TinkerBelleLuvr]

Depends on what they used the credit card to pay.